Washington State adopted its initiative process in 1912. Since that time, the initiative process has been used to enact laws large and small. Documents from the Secretary of State say, “Today, if Washingtonians are dissatisfied with certain laws or feel that new laws are needed, they can petition to place proposed legislation on the ballot.” It continues that the initiative process acts to secure “the rights of citizens to make and remake their laws, and to provide a check over the decisions of their Legislature”

Let’s be completely clear. The two upcoming ballot initiatives regarding liquor, Initiatives 1100 and 1105, have absolutely nothing to do with “Washingtonians dissatisfied with certain laws” or “securing the rights of citizens.” They are about big business. Initiative 1100 was largely driven and funded by Costco. Initiative 1105 was driven largely by Washington Beer and Wine Wholesalers, which now, comically, opposes the initiative.

This should come as no surprise. The initiative process in Washington State is, at this point, nothing more than a sham process for big business and moneyed interest groups to pass legislation that circumvents the state government. Period. This is what these two bills represent. Anyone who tells you otherwise is selling something or being paid by someone to say so.

Before I discuss the details of these two initiatives in a subsequent post I will give you my personal take on initiatives in general. The Washington State initiative process is a destructive force. In a highly dysfunctional state and local government, it tops the bill. Why?

Voters are asked to read increasingly complicated initiatives that are nearly impossible for the average person to decipher without – and in some cases with - a substantial amount of research. They are often complicated pieces of legislation that have far reaching ramifications on the state budget and on state laws. In the worst cases, it’s hard to even tell what voting for or against a particular initiative even means.

Personally, at this point, I refuse to sign initiative petitions when people - often paid by big businesses - are collecting signatures. I encourage others to do the same. The only initiative I would sign would be the one that either does away with the initiative process or substantially changes it. Those initiatives that do make it before voters, I routinely vote against – unless of course I need to vote for it to vote against it. If you are living in Washington State, you know exactly what I mean by this.

I have, occasionally, made exceptions for certain social issues. Why? Because these are not particularly complicated pieces of legislation and are things the legislature will never consider. I have no problem with this. But voting for or against initiatives that have large and wide reaching effects on the state budget that voters cannot possibly have enough detailed information to make an informed decision? Sorry folks. This is a sham.

The bottom line is that the issues in both of these initiatives are far too complex to be written by big box companies, foisted on the voters, and then force fed to the state whatever the consequences may be. So, simply based on principle as I believe this process is to the great detriment to the State of Washington, I will be voting against Initiatives 1100 and 1105. That is where I stand. Not because what these initiatives are proposing is necessarily good or bad, but because I do not believe issues like this should be left to voters to decide in this fashion. Issues like these are the entire reason why we have elected officials.

Now of course, if such matters as proposed in Initiatives 1100 and 1105 were to come before the legislature, the reality is that these same interest groups – Costco and others – would simply throw large sums of money at various lawmakers and lobbying groups to try to create the outcome that they want. Heck they would even front the money to get it before the legislature in the first place! But I will take my chances with a more sensible outcome before the state legislature than from voters trying to decipher these initiatives.

Having said all this, for those of you who want more details on these initiatives, I will offer – reluctantly – some details regarding these latest two s!#t sandwiches brought to you by the Washington State initiative process, Initiatives 1100 and 1105. I say reluctantly because, no matter how much research one does, it is fairly complicated to understand and detail the full extent of the changes proposed. I will, however, give it a shot. Look for this post later this week.

For your enjoyment, I have set up on the sidebar on the right two reader surveys – one for Initiative 1100 and one for Initiative 1105. I will leave these up until Election Day. Let the battle begin!

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comments

Sean,Without debating the pros and cons of 1100 and 1105, I do believe that the initiatives process is an important and valuable check against an often ineffectual state government. It would be ideal if we had all diligent, independent thinking elected officials, but that is not reality. While I have often voted against initiatives myself, as long as we do have the initiatives process, I believe that every one deserves serious consideration...not a blanket no.

Sean, good luck on making sense out of these gargantuan morasses of faux legislature. I've been scratching my head over them for weeks now. But just because big business has funded them doesn't make them all bad. Who else but big business could possibly force the state to make radical corrections to this wretched, ancient, cobbled-together, dysfunctional, special interest-driven and completely dishonest state-controlled system we are still stuck with after almost 80 years? Ow... my head hurts. Think I'll go grab a bottle of Dry Fly and some nice munchies... oh wait, can't do that without making two stops. Dang!

John, I don't believe replacing an ineffectual state government with an ineffectual initiative process is the solution unfortunately. I do believe that the initiatives deserve consideration. However, I can confidently state that there is absolutely no way that the average voter - even with serious study - is able to understand what is inside these two initiatives and their ramifications. They are far too complicated. The explanations of the initiatives as provided to voters are woefully inadequate and full of vagaries such as "repeal certain requirements." If you are asking people to vote on something, you have to make it intelligible and understandable for most citizens. These initatives completely fail that test.

PaulG, indeed trying to wrap your head around these two initiatives is a daunting task. Your point regarding big business being the only thing that would ever force the much needed changes is a good one. The state really will never take these issues up - too much money involved on all sides.

I wish I could say that I trust big businesses to make changes that aren't entirely lopsided in their favor. Then again, I wish I could trust government to make sensible changes too. At least in the case of businesses, you know who they are looking out for.

The face that WA state runs liquor stores is an anachronistic throw back to the days of prohibition. I do NOT trust my elected officials to consider changing this law - they have a vested interest NOT to.

Having grown up in Californ...ia where you could buy a fifth of vodka at Safeway, Longs Drugstore, or just about anywhere, I can not fathom why we have this stupid restriction here in WA. Liquor will be cheaper and far more convenient to purchase. We will also have a far better selection, especially on specialty liquors like fine cognacs, armagnac, and single malts that our wonderful state stores refuse to get unless you "special order" an entire case. It may benefit CostCo to sell liquour, but it will also benefit me, greatly.

Stephen, having grown up in a state where you could only purchase beer, wine, and liquor from liquor stores with restrictive hours and which were closed on Sunday (except during December), I agree that the state monopoly on spirits sales is completely ridiculous. I would love to see it go away personally along with a great number of other of our prohibition era laws.

The problem is, as you have pointed out:

- The state has a vested interest in not changing the existing laws. So they realistically won't do anything with legislation.

However:

- Big businesses have a vested interest in changing the laws in ways that work for them at the potential disadvantage of smaller businesses. This is, of course, how competition works!

Who looks out for the little guy? Unfortunately no one in this scenario. Unfortunately, these folks would fare no better with the legislature realistically.

I look forward to your thoughts on both 1100 and 1105. As a Canadian and a frequent visitor to WA ( I have a home in Kitsap) I have a different perspective on taxes. My concern is the impact on the states budget. Will the state still collect its mark up (51% I believe)? Will the state be better off not having to run the stores? I really think what should be important is how it affects the state and not the public convenience. I do not like the state run stores, and would like to see more options, but price to the consumer should not be the selling point, as I think WA prices are really cheap.

Ewan, thanks for the comment. I love to hear the thoughts from our neighbors to the north! I agree that the potential effect on tax revenue is significant and should be a major concern. Of course, if one or both of these initiatives pass, the legislature certainly can impose additional taxes to make up for any lost revenue. 1105 actually recommends this.

WA prices are only cheap compared to those crazy prices up in Canada! ;)

I'm the primary author of I-1100, so here's the intent behind it, straight from the source.

This is not primarily about either "big business" or "the little guy". This economic motivation is to have a free and fair market place that benefits both consumers and those businesses that are best at serving consumers.

As in a free and fair marketplace for every other product, some of "the little guys" will do better than others and the same holds true for big businesses. Small and large businesses who are confident in their abilities to compete for customers in a free and fair marketplace support I-1100. Those who aren't don't. The fact that we have both small and large businesses of various kinds on both sides of this issue, should confirm that.

There's also the issue of focusing the liquor board on enforcement and abuse prevention. Its other current activities of selling merchandise and trying to manage competition in the beverage industry (which inevitably only helps the most politically connected firms) simply don't benefit the public, in my opinion, and should be abandoned.

Stefan, thanks for stopping by and for providing some insight behind the bill. I agree that the having the LCB both sell liquor and enforce various laws/manage competition is contradictory from the get go.

So, let's take a look at this from the perspective of the small producer - winery, brewery or distillery. The basic problem with 1100 is that the quantity of production is too low for the small producer to see any benefit from the Costco's of the world selling their products - they won't be able to meet the case minimums for the supplier contract. 1105 keeps the distribution tiers in place and so some small producers lucky enough to be picked up by a specialty distributor will have more places to compete for shelf space but distributors in this economic environment are cutting their lists not adding to them. In the end I think if either of these pass all it will mean for local, small producers is that there will be too many direct-to-trade accounts out there for them to manage effectively and the laws will cost them margin or they will see their taxes rise in order to offset the loss of revenue to the state.

Sean-Thanks for the post and sharing your ideas (and thanks to the rest of you). I'm for 1100 and oppsed to 1105.

I support 1100 due to alot of the reason Paul and Stephan list. Our legislature is disfunctional. Using taxes and mark up on alchohol sales to feed the general fund is not an effecient or effective way to run a state budget.

I believe that if "the little guy" can't compete in an open market than that's too bad. Everyone should have the opportunity to try to pursue their passion. There are no guarantees that they will be successful. If your product is good and you know how to market you can increse the odds of success. The "build it and they will come" model doesn't work in any other successful business venture. Why should we expect it to work in the winery business?

So what will/could change? If you self-distribute you're on the road to what it will take to peddle your product. Strategic marketing and relationship building. You're not big enough to be all things to all consumers. Are your targets Canlis or Applebee's? Pete's or Safeway?

If you use a distributor at present how do you know they are doing everything to get your product in front of customers? There should be opportunities for small wineries to broaden their distribution channels. The best business decision may be to stay small and not break into that awkward 10,000 to 24,000 case volume space.

1105 looks like the Distributor Full Employment Act. I was not aware that they now oppose it. My guess is that means they are now fully in support of our current wonderful system.

Looking forward to your comments on both initiatives. Love the work you do and enjoy the community.

As a small retail wine shop owner, do I want a liquor/wine store on every corner? Probably not. Do I want Bevmo or Total wine to open down the street from me? Probably not. But that is what competition is all about in this country. We worried about Wally World coming to town, but in the end, it didn't really have that much affect. I have also paid retail for cases of wine from New Jersey for less than my wholesale cost in this state. Something's wrong there. Bottom line is, if these initiatives pass, they will affect everyone differently, and I am still trying to figure out how they will affect me.

Ky, many thanks for your comments and kind words. I agree with much of what you write, including that our legislature is dysfunctional. Our current liquor laws pain me. More importantly, they hurt businesses and consumers. With many of these laws providing the state and cities funding, is there incentive to change the laws? Should these changes be prioritized above the other laws that are being worked on?

I do believe that the legislature is unlikely to take up needed changes for these reasons. Is the initiative process the only way around this? Must we really have competing business interest groups attempting to write laws for us? These are the questions I ask myself when I think about this topic. It all makes me very sad frankly. I believe everyone loses in this setup. How best to change this is the question I keep coming back to.

Anon 11:40am, thanks for your comment. One of the things that I find most interesting about these initiatives is that most people I have talked to in the industry are trying to figure out how exactly it might affect them. No one seems to really know.

At a consumer level, most people I speak with boil the initiatives down to one thing: that it privatizes liquor sales. However, these changes obviously go much deeper.

What I keep wondering is, if we all - who have a vested interest - are struggling to figure it out, what the heck do we expect voters with potentially limited interest to do? Personally, I expect them to vote to approve 1100 and probably reject 1105 thinking that it just privatizes liquor sales. Is this really the way the system should work?

While I agree with free market principles, I assume that most of the people reading this blog like the wide variety of choice in the bottle brought to us by the WA wine industry. Not to mention the jobs, the out of state visitors, the positive press for the state etc. The wineries most hurt by this are the boutiques, as are the micro breweries,and the small restaurants that won't benefit from volume discounts.

These initiatives make it tougher for small businesses, who in this industry, provide the types of experiences and products that make wine and food fun.

It was nice to buy my liquor at Safeway when I lived in other states. However, the diversity and quality of the WA wine industry, including the tourism and revenue it brings to the state, are more important to me than a bottle of vodka or whisky at the grocery store.

I hear/read what you're saying/writing and wonder if the issue is less about the risk to the small wineries and more about consumer demand. Neither of these initiatives should dampen out-of-state tourist (or westside tourists for that matter) going to our wonderful wine country. It's about product placement, image, availability. These are elements, as we all know, of increasing brand awareness. It's what distributors claim they do. It's what winery owners will have to do.

The WA Wine Commission, it seems to me, has a golden opportunity to provide value to our boutique wineries by partnering with them in developing distribution chanels and relationships. Again, the boutique winery does not have enough case volume to satisfy the demands of 200 Safeway stores or Costco warehouses.

Nothing I've read in the initiatives prohibits the vintner from working with small restaurants to provide high quality wine selections at lower acquisition costs to those restaurants since the WSLCB is not longer between the two business entities.

To the fears of Small Producers, I need you! I manage a Wine /beer dept. that sells almost $4,000,000.00 a year in these products, I am looking foward to selling craft spirits as well as real craft brews and small family wineries. Our customers want these products, notice! in Costco a lot of small wineries are in a lot of there stores. Merlotman

Anon 5:36pm, I don't think leaving the decision up to the voters is necessarily a bad idea in principle - assuming the voters can understand the initiatives. This is where I have a serious problem. Most people I talk to are quite confused by the proposals.

I wonder though if interest groups trying to buy our votes with advertising dollars and obtusely worded initiatives is that much different than them trying to buy our votes before the legislature? To me, they are just paying a different group. And we're not even seeing the money.

Anon 5:45pm, I think you speak to an important point which is that there will always be a market for small family wineries even if the laws change. I know that I will certainly still be interested in those types of wineries, but I'm also not a good case study.

Kerry and Ky, interesting discussion. The main concern that I have heard is whether small wineries will be able to survive when larger wineries are able to sell a greater volume of wine at a lower margin to make a profit. Not an option for the smaller producer who both can't offer the greater volume and can't offer the lower margin. Some say, "That's the way free markets work." Other say, "This is why we have so many chain stores and so few small businesses."

One thing that is absent from the above comments is how the beer industry is spending big bucks (6+ million) to oppose both I-1100 and I 1105. The Beer Barons have a vested interest in maintaining the status quo so that grocery stores and taverns will have to continue to buy beer on their terms. They have no interest in privatizing spirits, which is their competitor. I have mixed feelings about both initiatives; both are flawed. But the Liquor Board has shown no interest in changing the system. And the Legislature has gone no further than to "study" the system. Aside from the initiative process, how is the system going to be change?. By the way, I think the small wineries' fears about losing ground as the "little guys" is exaggerated. Most are so small, with limited supply that they can name their own prices.

All in all, I think the existing system is so antiquated and wretched, especially with the clear conflict of interest of the state being in the liquor business as well as enforcement that the time for change has to come one way or another.

Another thing to keep in mind is that the legislature has the power to amend initiatives two years after they become law. So, if there are things that don't work, they can be changed.

In the final analysis, I think the need for change outweighs the flaws in the initiatives. It's a bad situation. The Legislature won't do anything. Why have other states - Maine, West Virginia, Mississippi and others privatized liquor - and Washington hasn't? I find it galling to have to buy a bottle of spirits in a state store (that's socialism, just like the USSR when Russians had to go to state stores to buy vodka). This issue isn't just about wine and liquor, but how the whole system should operate.

Rand, an absolutely exceptional series of points. This one particularly sums things up for many: "I have mixed feelings about both initiatives; both are flawed. But the Liquor Board has shown no interest in changing the system. And the Legislature has gone no further than to "study" the system. Aside from the initiative process, how is the system going to be change?"

It's a sad state of affairs when we need to rely on businesses to craft legislation via initiatives that includes necessary - as well as unnecessary - changes because the liquor board and legislature are not doing their jobs.

One final thing, I thought that the 'Beer Barons' were most concerned about public safety? Am I missing something?

Oh yes, Sean, the Washington Beer and Wine Wholesalers are supporting the movement to "Protect our Communities" by opposing I-1100 and I-1105. They are dedicated to the movement to "Protect our Businesses" as well.

It is disappointing that you are a member of "the average American voter is too stupid to understand the issue" camp. The vote of the people is what has made our country the greatest in the world and Washingtonion votes are what has made our state the greatest in the Union. Letting "daddy government" decide what is "good" for us children has had its day. People are not as stupid as you think.

Anon, you misunderstand me almost completely. I do not believe even slightly that "the average American voter is too stupid to understand the issue" as you state. I believe that the issues are poorly presented to the voters in these initiatives requiring significant amounts of research, much of which is difficult and time consuming (see my subsequent posts).

To wit, Initiative 1100 makes no mention - NONE - in it's title or its summary of dismantling the three tier system, one of its most significant effects. Many of the most significant effects on consumers are hidden under the 'repeal certain requirements' clause. This is careless at best, deliberate misprepresentation at worst. It is the epitome of what is wrong with the initiative process.

I still don't think you have shared your opinion, and being influential in the community, I think its important that you do so.

The process is what it is, and voting against these initiatives because the initiative process is broken doesn't do anybody any good.

This is a big opportunity for the state industry to reduce restrictions, reduce taxes, reduce state control and regulation, and enable the producer to create the business of their dreams, big business grow (and hire more) and the consumer to make their own choices.

The main argument against the initiatives being given in the advertising is how they endanger the community safety. No mention is made of the beer industry's backing of the opposition to both initiatives. They are hiding behind the "Protect our Communities" slogan. For them, as I stated above, it is all about "Protect our Businesses."

Enforcement and revoking licenses of businesses that violate the law is what the Liquor Board should be doing. Are we going to be bamboozled by the Beer Barons? Yes, the issues are terribly confusing, but that is just what the beer industry is counting on.

Sean O'Connor, you are more charitable than another reader who emailed me saying that my position was a cop out and that I was spineless!

Were I to consider voting for either of these pieces of legislation - note that I do not say initiatives because they are really substantial pieces of legislation written as initiatives IMO - it would be very difficult for me to vote for either of them as presently written. My main concerns would be:

1. The financial ramifications for the state: I'm sure that the legislature would try to address this with additional sources of revenue from liquor if the initiatives were passed, but it might be unable to. The sums we are talking about are quite large and could not be made up easily. I would want to understand where the cuts would most likely come from if the revenue was lost as well.

2. A potential negative effect on Washington's many small wineries: Many have stated concern about this which is part of the reason why the wineries are split both for and against. This is something I am looking to explore and discuss in the potential post I referred to elsewhere with winemaker/distributor/retailer opinions.

If we were in a non-wine producing state, I would have less concern about any potential negative effect in this regard. Given that we are the second largest wine producing state in the nation and that our small wineries are critical, I would need to feel confident that the laws as written would be fair to all, the little guys and the big guys.

3. Consistency with other states and other products: I would want to see how in-line or out of line these changes are with a) other states in the nation and b) other types of products beyond liquor. From the research I have done, these changes would appear to be precedent setting in terms of the state level (not necessarily a bad thing). It would appear to put liquor more in line with other products at the product level. However, I would want to explore this further as well.

Bottom line, without feeling satisfied on each of these points, I would be unable to vote for this legislation. I do, however, feel Rand's pain of wondering how else these changes are going to happen. Should we put a gun to the legislature's head in hopes that this will force them to make the necessarily changes? Rand mentioned in an earlier comment that the legislature is able to review initiatives and make changes after a certain time period (2 years I believe he said). I would want to check to ensure that this was the case if I were considering voting for either of these initiatives.

Hopefully you can understand why I am not comfortable making these decisions without complete information. No one should be frankly. This is what frustrates me so much about this process. I have already spent an enormous amount of time researching and writing these posts with a lot more to go. I still can't say that I feel satisfied that I have enough information to make a properly informed decision. Should voters really be expected to do this?

I am definitely on the side of those in favor of 1100 but not 1105. (What happens if they both pass? anyone?)

I don't really understand the fear of the small winery/distilleries that are out there. The fear that they can not compete with the volumes of the bigger winery/distilleries so distributors won't want their product, you can now be the distributors of your product! You could market to restaurants and bars now.

Anyway, was that the goal upon opening the business to compete with the big guys? Of course if you make the same product and sell it for twice the cost you should expect failure. Luckily you guys are not making gasoline, your products are unique and people will want them if they are good and will be willing to pay a little extra for them. (no offense to those who choose their gasoline by brand and not by price) I have been dying to get my hands on some WA state made whiskey, but the WSLCB won't (ok rarely) stock them because they don't make enough. Can I order it from the distillery? No, not under the current laws. So short of driving to the distillery and taking a tour, there really no way to get any of it.

Under 1100, the manufacturers can obtain both a distributor and a retailers license. So finally you can sell your product to who you want!! and finally, us consumers can get are hands on what we want.

I have personal interest in micro-distillery, at last the distillers can actually sell their product. If they want to open a restaurant/bar that serves their spirits they will be able to. This would be nearly impossible under the current system. (From my understanding, it still would be if 1105 passed)

To Sean, thanks for the comments and this great thread. However, if you are unhappy with the current liquor system, but do not feel that you can make an informed decision regarding these initiatives, why are you voting no on them? No is also a decision. Or do you take a philosophical no until proven yes stance on all initiatives? I would kind of prefer that voters who don't read or research the initiatives just not vote on them at all.

Anon, I am definitely a "vote no until proven yes" type person. And generally that proven yes bar is very, very high for me on most of these increasingly complicated initiatives. I like to have a full command of the facts before making a vote. It frustrates me that this is increasingly complicated to do (I can't tell you how much time I spent accumulating the information in the subsequent posts).

I must say that many of the people I have talked to, including many people across the three tiers who will be directly affected by these changes, admit to being quite confused by these initiatives. If these people can't get it, how can we expect voters to? It's not because voters are stupid. It's because these initiatives are quite complex and were presented in an overly simplistic fashion on the ballot. Personally, I resent both.

Most people seem to just think that a yes vote privatizes liquor, and that's part of what bothers me. Most of the substantive changes are buried so that people can't see them because if they did, they would get confused and uncomfortable with the whole thing.

Many of the main arguments I have heard boil down to:

1) "The legislature is never going to change this system because it hasn't thus far. This is the chance to change the system." An indictment of the legislature that is hard to argue with. Is this the only chance for change? If so, is it worth any potential problems and perils? I wish I could say with any confidence that if these initiatives get voted down that the legislature would take up the issue. However, I also wish I could understand fully potential negative impacts on small producers if they pass. I'm still working on understanding the latter.

2) "1105 makes no sense because it drastically cuts revenue." This argument against 1105 is ironic because 1105 was designed to be revenue neutral but allow the legislature to design the new laws to make up for the revenue rather than proposing the changes itself. Most people I talk to think this initiative is a non-starter because they assume the latest Eyman initiative will pass. To me, this is quite a tangled web that translates to this: "We're going to make changes via the initiative process because the legislature hasn't done it but then we're going to let the legislature make additional changes themselves" and "We can't vote for this because the legislature will not be empowered to make up the revenue due to other initiative related changes." What a mess. Additionally, many are just against 1105 based on the fact that it was funded by out of state companies.

In any event, thanks for the comment. Next up on this topic, thoughts from wineries, distributors, and retailers.

I would not go so far as to say you are a moron. You are entitled to you opinion, however I believe it wrong. The initiative process in Washington State my not be perfect, but I feel it is fair. I am a police officer in this state and Initiative 790 a few years back provide us (police officers and fire fighters) with more control over our retirement system. I also do not feel that our state should be in the liquor business. I may be in the minority, but that is my personal opinion. I also will remain anonymous for several reasons.